Cover Story: What’s Next

By By Paul DemeryInternet Retailer

Internet retailing anywhere, anytime—but with an emotional tie

A shopper stares fully engaged with the screen on her mobile phone, intrigued by the antics of a character on her favorite TV show. Then she touches an ad on the screen to fire up an e-commerce page to purchase the shoes the character is wearing.

Before clicking to purchase, she forwards an image of the shoes to her friend’s Facebook page and a note to Twitter about what she’s doing. Within minutes, she receives text messages from friends saying the shoes are fabulous, a must-buy. Then she flicks to another friend’s MySpace page featuring a popular shoe retailer’s e-commerce widget, where she finds the same shoes at a better price.

But, just before clicking the Buy button, she happens to get an e-mail from her favorite footwear retailer, clicks to its site, finds the shoes and then buys them with matching apparel-not online, but in that retailer’s nearest store identified on her GPS-connected phone. What clinched the sale? A life-size image flashed on one of the store’s merchandising windows of an outfit featuring her must-have shoes.

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That’s the future of e-commerce, and it’s not far off. In fact, the technology to provide that kind of shopping already exists. And experts say it won’t be long before some retailers are putting the pieces together to enable such a socially interactive, multi-channel, flexible shopping experience.

“Growth in Internet retailing will not necessarily come directly through the traditional retail channels, but through all the multiple connections consumers use,” says Janet Sherlock, research director on the retail strategies team at research and advisory firm AMR Research Inc. “There are a lot of moving parts.”

And while such investments may seem risky during an economic downturn, online retailers have to realize that there’s no longer a rising e-commerce tide that will automatically lift all retailers’ boats, says David Fry, president of e-commerce design and development firm Fry Inc. “Now that the tide is about to go out, the question is will retailers swim with the tide or get stuck behind in the mud.”

To compete in the coming decade, experts say, retailers must not only reach consumers in new ways but also project a trusted brand that stands out in a market broadened by the Internet. “It always comes back to how you make that emotional connection,” says Jim Okamura, senior partner at retail consultants J.C. Williams Group. “It’s what makes great brands great-making strong personal connections without being intrusive.”

What shoppers want

Innovative retailers like computer maker Dell Inc. and shoe retailer Zappos.com Inc. are doing just that, starting with ambitious ways to reach out to shoppers, then bringing them to e-commerce sites that offer the kind of helpful, social and multi-channel retailing environments that online shoppers increasingly demand, experts say.

To find out directly from consumers what they want, for example, Dell has launched an online forum called IdeaStorm.com that has generated more than 11,000 ideas for better products. Dell included six consumer-generated ideas in its new Latitude line of laptop computers last summer, including back-lit keyboards. “We’ve implemented more than 260 consumer ideas overall,” says Bob Pearson, vice president of communities and conversations.

Not only has that helped sales of the Latitude, but the emotional ties Dell forges with IdeaStorm participants complement the company’s presence on social networks Facebook.com and Twitter.com, where users may share information from IdeaStorm, Pearson adds.

Voice of the customer

Dell has also brought the social experience to Dell.com. With more than 100,000 online customer comments developed with the Bazaarvoice ratings and reviews application, Dell recently rolled out a “Voice of Our Customer” program that injects customer-generated content throughout the online purchasing process. On a laptop category page, for example, Dell may display a logo with the tag line “Customers are Talking” and a quote about a featured laptop line from a customer-generated review.

“It can be too jarring for customers if they leave the social environment of Facebook or Twitter and go to a commercial site with no social content,” Pearson says. “We want them to have a similar social experience on Dell.com, because they want to hear from peers throughout the purchase process.”

Zappos, which connects with consumers through MySpace, Facebook and Twitter, as well as video site YouTube.com, is also focused on building emotional ties to consumers, says Brian Kalma, director of user experience, who is in charge of redesigning Zappos.com to better take advantage of such ties.

Nearly a third of the retailer’s employees, about 450, regularly use Twitter, and the retailer’s Twitter.Zappos.com site which aggregates all Twitter mentions of Zappos so the retailer can learn from and respond to comments.

“We don’t want to push our products on Twitter, but we have 50,000 conversations with our followers on Twitter every day,” Kalma says. “That allows us to create an emotional and personal connection that’s stronger than any advertising.” Recent tweets from Zappos customers on Twitter, for example, ranged from a favorable comparison of the retailer with high-end merchant Nordstrom, to a request for help from a customer who wanted to return a pair of shoes but didn’t have a shipping label.

While not aiming to sell through social networks, Zappos provides links from those networks to its retail web site, and Kalma is determined to make Zappos.com a better extension of the social experience, he says.

Using some of the latest web site design technologies like product recommendation engines and Ajax, which supports fast loading of images and other content, Zappos will provide shoppers with the ability to shop in a manner that is both more personalized and more social, Kalma says. A customer who wants to shop for size 8 black high heels under $150, for example, could, with a few clicks, see a page full of such products plus complementary apparel outfits. Mousing over each pair of heels would activate Ajax pop-ups that offer product details and facilitate sending comments to friends in social networks.